UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 18, 2002
DIGITAL COURIER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-20771 87-0461586
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
348 East 6400 South, Suite 220, Salt Lake City, Utah 95035
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 266-5390
N/A
(Former Name or Former Address if Changed Since Last Report)
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Item 5. Other Events and Regulation FD Disclosure
Marshall Settlement
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On March 18, 2002, Digital Courier Technologies, Inc. ("DCTI" or the "Company"),
Donald J. Marshall and Nautilus Management, Ltd., an entity wholly-owned and
controlled by Mr. Marshall ("Nautilus" or, together with Mr. Marshall,
"Marshall") entered into an amendment (the "Amendment") of the Settlement and
Release Agreement (the "Settlement Agreement") previously entered into among
them on October 16, 2001 to resolve a dispute regarding an allegation by Mr.
Marshall that the Company had breached the Settlement Agreement, which the
Company denies, and to make certain desired changes to the original terms of the
Settlement Agreement.
This matter began in connection with litigation brought by Mr. Marshall against
the Company in 2001, primarily regarding the Company's alleged failure to
register certain stock held by Mr. Marshall. On October 16, 2001, the Company
entered into a settlement agreement with Mr. Marshall (the "Settlement
Agreement") to resolve the litigation. As part of the settlement, the Company
issued to Mr. Marshall 3,500,000 shares of common stock and Mr. Marshall granted
an irrevocable proxy to the Company's current Chairman and Chief Executive
Officer to vote the shares for a period of up to three years. In addition, the
Company agreed to pay Mr. Marshall $800,000 in quarterly installments (the "Cash
Payment"), beginning with the quarter ending December 31, 2001, based upon a
percentage of the Company's earnings before taxes, depreciation and
amortization, if any, during each quarter. DCTI agreed to make all payments by
October 2004 with annual interest at 15% accruing beginning in 2003. To assure
payment, the Company also executed a confession of judgment, which may not be
entered absent a default under the Settlement Agreement, in the amount of
$7,500,000. The Company also modified a prior consulting agreement with Mr.
Marshall.
In February 2002, Mr. Marshall asserted that DCTI had defaulted with respect to
its obligation to pay the Cash Payment. Specifically, Mr. Marshall asserted that
DCTI failed to remit to him the required quarterly payment after due notice and
after the expiration of the cure period specified in the Settlement Agreement.
DCTI disputes all of Mr. Marshall's assertions.
In order too resolve this dispute, DCTI and Mr. Marshall entered into the
Amendment which provides as follows:
o Mr. Marshall waives any rights accruing to him as a result of any
alleged prior default by DCTI with respect to the Cash Payment
obligation under the Settlement Agreement.
o In consideration of Mr. Marshall's waiver, DCTI is required to pay to
Mr. Marshall a concession fee of $136,000, of which $36,000 was paid on
March 20, 2002 and $100,000 is payable by delivery to Mr. Marshall of
1,428,571 shares of DCTI's restricted common stock issued in the name
of Nautilus within ten (10) business days after the date of the
Amendment. The certificates are to be dated prior to March 15, 2002.
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o DCTI and Mr. Marshall will negotiate in good faith a mutually
acceptable joint defense agreement regarding the case captioned Ameropa
Ltd. v. Digital Courier Technologies, Inc. et al., Case No. BC240619,
currently pending in the Superior Court of the State of California for
the County of Los Angeles. The Ameropa Ltd. litigation involves
allegations by Ameropa Ltd., a holding company, that DCTI purchased a
company in which Ameropa's assignors had an interest, without
compensating those assignors. DCTI disputes Ameropa's allegations and
intends to vigorously defend itself.
o The $800,000 Cash Payment will be payable to Mr. Marshall, without
interest, at the rate of $3,500 on the fifth day and twentieth day of
each month (for an aggregate monthly payment of $7,000) commencing with
May 5, 2002 until the earlier of (i) the date DCTI has paid to Mr.
Marshall the full Cash Payment, or (ii) March 31, 2006, on which date
the entire remaining unpaid balance of the Cash Payment will become
immediately due and payable.
o The remaining unpaid balance of the Cash Payment will accelerate and
become immediately due and payable whenever (1) DCTI sells all or
substantially all of its assets (2) DCTI completes any merger pursuant
to which the owners of DCTI's common stock prior to such transaction do
not own in excess of 50% of the voting capital stock of the surviving
entity, (3) DCTI repurchases in excess of 50% of its outstanding
capital stock, (4) DCTI issues voting capital stock in any transaction
or series of transactions within any six month period as a result of
which the holders of DCTI's voting capital stock before such
transaction or series of transactions hold less than 50% of DCTI's
voting capital stock after such transaction, (5) a majority of DCTI's
board of directors is replaced other than by voluntary action of such
board of directors, or (6) upon the occurrence of any event of default
under the Amendment.
o Upon an event of default as defined in the Amendment, which includes
defaults in the payment by DCTI of amounts due to Mr. Marshall and
other customary contractual default provisions, any unpaid balance of
the Cash Payment begins to accrue simple interest at the rate of 1.5%
per month until paid in full, and Mr. Marshall may convert all or any
portion of the then unpaid balance of the Cash Payment plus any accrued
and unpaid interest into shares of DCTI common stock. The number of
shares issuable upon conversion will be determined by dividing the
dollar amount to be so converted by the lesser of (A) $0.07 per share,
or (B) the average closing bid price of DCTI's common stock as quoted
on any nationally recognized quotation service for the 20 trading days
immediately preceding the date of such conversion.
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o Until the Cash Payment has been paid in full, Mr. Marshall shall have
the right to name one person, other than himself, to serve as a member
of DCTI's Board of Directors.
New Director
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Also, on March 18, 2002, DCTI's Board of Directors elected Denis Yaro to fill an
existing vacancy. From October 1999 to June 2001, Mr. Yaro was President and
Chief Operating Officer of Conducent. From January 1996 to October 1999, Mr.
Yaro was with CyberCash in various capacities, including Vice President, Product
Development, Executive Vice President, Products and Operations and Executive
Vice President, Strategic Business Development. From May 1989 to July 1995, Mr.
Yaro was with - Sun Microsystems, in various capacities, including Director,
Network Management, Vice President/General Manager, SunConnect, Sun's networking
products business unit, and Vice President/General Manager, SunSoft Enterprise
Management business unit. Mr. Yaro has a B.A. in Mathematics from St. John's
College. The Company will submit the nomination of Mr. Yaro to the stockholders
for election at the upcoming annual meeting of stockholders.
Forward-Looking Statements
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Statements regarding the Company's expectations as to future revenue from its
business strategy, and certain other statements presented herein, constitute
forward-looking information within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes that its
expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that actual
results will not differ materially from expectations. In addition to matters
affecting the Company's industry generally, factors which could cause actual
results to differ from expectations include, but are not limited to risks
relating to the Company's continued ability to create or acquire products and
services that customers will find attractive and the potential for increased
competition which could affect pricing and profitability. Please see the
Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K on file with the Securities and Exchange Commission
for further information concerning such factors.
Solicitation Disclosure
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In connection with certain of the above-described transactions, Digital Courier
Technologies, Inc. intends to file a proxy statement and other materials with
the Securities and Exchange Commission. Security holders are urged to read the
proxy statement and these other materials when they become available because
they will contain important information. Security holders may obtain a free copy
of the proxy statement and these other materials when they become available, as
well as other materials filed with the Securities and Exchange Commission
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concerning Digital Courier Technologies, Inc., at the Securities and Exchange
Commission's web site at http://www.sec.gov. Security holders of Digital Courier
Technologies, Inc. may also obtain for free the proxy statement and other
documents filed by Digital Courier Technologies, Inc. with the Securities and
Exchange Commission in connection with the above-described transactions by
directing a request to Evan Levine, Interim Chief Executive Officer, Digital
Courier Technologies, Inc., 348 East 6400 South, Suite 220, Salt Lake City, Utah
84107 telephone: (801) 266-5390.
Digital Courier Technologies, Inc. and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from Digital Courier
Technologies, Inc. stockholders with respect to the upcoming annual meeting of
stockholders. Information regarding these directors and executive officers,
including their ownership of Digital Courier Technologies, Inc. common stock,
will be contained in Digital Courier Technologies, Inc.'s definitive proxy
statement relating to the meeting.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 26, 2002 DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ James J. Condon
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James J. Condon
Chairman of the Board
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Exhibit Index
Exhibit Number Description
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4 Amendment No. 1 to Settlement and Release Agreement dated as
of March 18, 2002, by and among Digital Courier Technologies,
Inc., Donald J. Marshall, and Nautilus Management, Ltd.
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